Bexley Borough – Home Ownership Time Bomb

Many think that the British obsession with owning one’s own home started with Thatcher in the early 1980s, when she allowed council tenants to buy their council houses under the Right to Buy scheme. However, the growth actually started just after the Second World War. Looking at the country as a whole, in 1951 30% of residential property was owner-occupied. Every ten years, that figure rose incrementally to reach 39% by 1961, 51% by 1971, 58% by 1981 and 68.07% by 2001. At that point things changed. The rate dropped to 63.4% by 2011 and it continues to fall.
Young adults tend to start to think about settling down and moving out of the family home in their early to mid-twenties. After a couple of years, they can choose between buying their first house (with a mortgage) and renting privately for the long term. At the moment the Council House waiting list is measured in decades!
The ratio of people who own a house with a mortgage to those renting privately is an extremely important guide to what people are doing about their housing needs and their attitudes vis a vis renting versus buying. My prediction is that, within the next ten years, more people will be renting privately in Bexley Borough than living in properties they own with a mortgage. As the years pass, I feel that the British love affair with property ownership is likely to fade. These changes are highly significant in terms of how we live. As I explained to a local Bexley Borough landlord the other day, knowing when and where tenants’ demand will come from over the next decade is just as important as knowing the supply side of the buy to let equation with regard to the number of properties built in the town and Bexley Borough property prices and rents.
There are 9,721 households that are privately rented via a landlord or letting agency versus 37,781 households owned with a mortgage in the Bexley Council area, so how can my predication make sense?
When we look deeper (the devil is always in the detail), 18,377 of those 37,781 houses are owned by 35- to 49-year-olds and 11,402 by 50- to 64-year-olds. I expect all the 50+ year-olds to pay their mortgage off as they enter retirement, while some will pay theirs off by their mid/late 40s. Meanwhile, among those aged 25 to 34 (the age at which most people bought their first home in the 1970s/80s/90s) just 5,717 of the 8,845 households are owner occupiers with mortgages, with 3,128 homes privately rented. In other words, just 64.6% of 25- to 34-year-olds have bought their houses. Twenty years ago the percentage was between 75 and 85.
Clearly, while the older generation pays its mortgages off on approaching retirement age, the younger generation isn’t jumping on the property ladder as people did 20 or 30 years ago. This means that the private rental sector will take up the slack as more people will want a roof over their head, while preferring to rent. As Local Authorities and Housing Associations are not building nearly as many houses as they were in the 1950s, 60s and 70s, it seems likely that the private landlord will enjoy strong demand for their rental properties for many decades to come. The housing market will become polarised between the mostly older households that own outright and the mostly younger households that rent. In this respect, our housing market is tending to conform with the European model. However, the younger generation will inherit their parents’ properties, which in turn will enable them to buy, albeit later in life.
If you are a landlord or thinking of becoming a landlord, and would like to read more articles on the Bexley Borough property market, please visit the Bexley Borough Property Blog: www.bexleyproperty.co.uk or give our offices a call on: 01322 559955.


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